"morality" exercise:Performance Presentation,

C is correct because Standard IV(C)–Responsibilities of Supervisors has not been violated as Seneca is not responsible for the supervision of any employees when he makes sales demonstrations to clients because he prepared the material himself. Seneca violated Standard IV(A)–Loyalty by misleading potential investors on the performance they might achieve with the index funds, thereby causing reputational risk to his employer. Seneca has also violated Standard III(D)–Performance Presentation because the sales demonstrations he conducts do not provide a fair and accurate representation of performance clients are likely to experience. 

A is incorrect because Seneca understates risks and only includes positive assumptions in his sales presentations in order to achieve higher simulated performance. This is a violation of Standard IV(A)–Loyalty because he is causing reputational risk to his employer by misleading potential investors on the performance they might achieve with the index funds. Standard IV(A) requires members and candidates to protect the interests of their firm by refraining from any conduct that would injure the firm.

B is incorrect because Seneca has violated Standard III(D)–Performance Presentation because the sales demonstrations he conducts do not provide a fair and accurate representation of performance clients are likely to experience.

A is correct because under standard IV(C) a member should exercise reasonable supervision by establishing and implementing compliance procedures prior to the possibility of any violation occurring, which has not been done in this case.

 B is a correct action but does not address the standard violation. These actions are intended to restrict activities after the violation and do not relate to investigating why or how the violation occurred, which would be necessary to establish and implement adequate compliance procedures. 

 C is a correct action but the steps were taken after the fact and procedures should have been in place previously.